Timor-Leste, an island nation in Asia pacific, gained independence from Portugal in 1975. The country is located north of Australia and south of the islands of Indonesia; immediately following independence, Timor-Leste was invaded and occupied by Indonesian forces. The subsequent fight for independence from Indonesia lasted more than two decades and cost the lives of an estimated one-fourth of Timor-Leste’s population. Amid increasing international pressure, Indonesia agreed to an independence referendum in 1999.

The result, showing overwhelming support for independence, prompted further conflict. More than 1000 people died, hundreds of thousands were displaced, and homes and businesses were destroyed. An international peacekeeping force intervened to restore order, and Timor-Leste became a sovereign state in May 2002.

Following democratic elections, peace was sustained until a spate of civil unrest between 2006 and 2008, marked by an attempted coup and the resignation of the Prime Minister Mari Alkatiri. Upon government request, the UN Security Council and the Australian-led International Stabilization Force deployed more than 1500 personnel to restore peace and security. In December 2012, the UN peacekeeping mission wound down. The government has actively pursued national reconciliation and social and economic reconstruction.

Government Title

Name

President

H.E. Taur Matan Ruak, a.k.a. José Maria VASCONCELOS

Prime Minister

H.E. Dr. Rui Maria de ARAUJO

Minister of Finance

H.E. Santina Jose Rodrigues Fereirra Viegas CARDOSO

g7+ Focal Point

Mr. Cancio de OLIVEIRA, Head, DPMU

New Deal Implementation

Timor-Leste has been a member of the g7+ since 2010. It is one of seven pilot countries implementing New Deal principles. Timor-Leste completed its first Fragility Assessment in 2012, and is carrying out a second phase assessment in 2015. The country has also engaged in Fragile-to-Fragile (F2F) cooperation with fellow g7+ countries Central African Republic, DRC and Guinea-Bissau, and ebola affected countries (Sierra-Leone, Guinea and Liberia).

Timor-Leste has a strong record of inclusive democratic politics and an organized civil society since the restoration of its independence from Indonesia. The Head of State is the President of the Republic, who is elected by popular vote for a five-year term. The President exercises the right to veto legislation put forth by the government and approved by the National Parliament. The Head of Government is the Prime Minister, who is appointed by the President and is the leader of the majority party or majority coalition.

The unicameral Timorese parliament is the National Parliament, whose members are also elected by popular vote to a five-year term. The number of seats can vary from a minimum of 52 to a maximum of 65. All legal political parties can run in legislative elections. Local governance is managed by sucos, community-level elected governance units. Some sucos govern as few as 50 people, others as much as 65,000; the average suco governs a population of 2500. Most sucos operate with limited oversight from the central government in Dili.

The last national elections took place in 2012; the next elections are scheduled for 2017.

With 60 percent of the population under 25 years of age, Timor-Leste is one of the youngest countries in the world. Education, health, and employment are key challenges to economic growth. Timor-Leste achieved lower middle-income status in 2011, in part due to high oil revenues, but poverty remains a challenge. Food insecurity and limited access to healthcare is predominant in rural areas, where the majority of the population lives.

The government’s Strategic Development Plan for 2011-2030 offers a vision, targets and indicators built around four pillars: (1) Social capital, comprised of health, education and social protection; (2) Infrastructure development, including transport, telecommunication, power, and water supply and sanitation; (3) Economic development, targeting three sectors for development—agriculture, tourism and petrochemicals—to diversity the primarily oil-based economy and generate new sources of public revenues; and (4) Institutional strengthening, focusing on security, defense, foreign affairs, justice, and public financial management.

Timor-Leste’s infrastructure and provision of government services have improved significantly in recent years, and increases in public spending have accelerated economic growth. Improvements in commercial legislation, regulatory policy and dispute resolution mechanisms are ongoing. Foreign direct investment is concentrated in the oil and gas sector; primary investors include ConocoPhillips (U.S.), Royal Dutch Shell (Netherlands) and Woodside Petroleum (Australia). Timor-Leste’s currency is the U.S. dollar, which remains strong; inflation is low and domestic demand is increasing.

Other domestic markets offer promising investment opportunities, including hospitality, tourism, export-import, logistics, and consumer goods. The Government of Timor-Leste welcomes foreign direct investment and is taking steps to promote economic diversification by offering tax incentives in non-oil industries, including agriculture and tourism. Non-oil private investment from Singapore, China, Indonesia, and Australia is growing. Capacity and resource constraints, particularly in local finance and property rights, continue to pose challenges to investors, but Timor-Leste’s Doing Business ranking has improved steadily in recent years.